Microsoft Chases Cloud, Social Trends With Yammer Purchase

Microsoft's $1.2 billion purchase of Yammer yesterday was a not only a reflection of the growing importance of social software within the enterprise, but also a somewhat belated reflection of the growth of cloud-based services aimed at business customers.

Microsoft's $1.2 billion purchase of Yammer yesterday was a not only a reflection of the growing importance of social software within the enterprise, but also a somewhat belated reflection of the growth of cloud-based services aimed at business customers.

Cloud-based business software is far from a new trend. It has its roots in what were called "ASPs" in the dot-com boom of the late 90s, and then got new legs as the "software-as-a-service" model. Salesforce.com has been the poster boy, with CEO Marc Benioff long preaching the "no software" movement in which users can access software through a browser rather than installing it.

Fifteen years into this movement, there have been plenty of successes—not just with Salesforce, but Netsuite, Workday, Concur, Google Apps, and many others. In recent years, former naysayers like Microsoft and Oracle have gotten into the market.

Microsoft's previous entries include Office 365, an online office suite that is typically seen as a competitor of Google Apps; Dynamics CRM, a competitor of Salesforce.com; and Azure, a platform-as-a-service offering aimed at developers. I always got the sense, though, that Microsoft would prefer selling traditional desktop and server software, and the company typically does offer both hosted and on-premises versions of these tools. That makes sense since there are still businesses that want to run their own software, whether for efficiency reasons, legal or privacy concerns, or basic control. The movement toward more cloud-based applications seems inevitable at this point.

Oracle brought home the point earlier this month, when, after initially resisting the "cloud" terminology, it released OracleCloud, a suite of applications and a platform of hosted applications.

Oracle's approach is a bit different than the others. It relies on virtual hosted images of the applications for each customer, rather than the multi-tenancy approach of Salesforce and most other cloud-based services. Of course, Oracle continues to offer on-premises solutions as well, and touts the ability to move applications among corporate servers and multiple cloud-based approaches.

(Note that although Oracle CEO Larry Ellison didn't like the cloud terminology, he has talked about the "network computer" for as long as anyone and has long been the largest shareholder of NetSuite.)

Oracle, too, has been sweeping up cloud-based companies. Last year, it bought RightNow, which provides customer service applications. In recent weeks it bought Taleo, an HR platform, and Vitrue, which handles social marketing campaigns and social media analyzer Collective Intellect.

In some ways, Oracle and Salesforce seem to be competing in more markets. Besides their traditional CRM competition, both now have customer service offerings. With Vitrue and Collective Intellect, Oracle seems to be targeting marketers. In a similar vein, Salesforce, which last year announced its plans to push for social marketing, has acquired Radian 6, which makes social monitoring software, and social marketing company Buddy Media.

In addition to Microsoft and Oracle, the other two of the four big enterprise vendors are also buying cloud-based applications. SAP paid $3.4 billion last year for SuccessFactors, which makes HR software, and recently announced plans to purchase cloud procurement provider Ariba for $4.3 billion. IBM has made a number of smaller acquisitions, including cloud-based analytics maker DemandTec and testing vendor Green Hat.

But what is most interesting about the Yammer purchase is the continuing validation of "social" and collaboration tools within the enterprise. Yammer has been described as "Facebook for business," focused on allowing coworkers to share information more quickly using feeds and a Facebook-esque interface.

Its primary competitors have been Jive Software, which offers a few variations on the theme, and Salesforce's Chatter. These two, and Yammer, have all grown tremendously in recent years as companies discovered that employees are more likely to collaborate in such systems. As a result, in many ways they are seen as competitors to products like Microsoft's SharePoint and IBM's Notes and "social business" tools.

Indeed, Microsoft said it will continue to develop Yammer as a standalone service, in addition to trying to integrate it into SharePoint and other enterprise collaboration tools.

Similarly, there are lots of cloud-based tools designed to make it easier for employees to share documents and collaborate, whether they be tools such as Google Apps or document sharing solutions such as Box, which focuses on enterprise customers rather than on the consumer market, like Dropbox, Google Drive, or Skydrive do. Continuing the trend, Salesforce just announced it is buying group communications company ThinkFuse.

Going forward, it will be interesting to see whether organizations want big, integrated platforms with lots of features—such as SharePoint—or whether more focused tools, such as Yammer, Chatter, or Jive, will prove easier to implement and, more importantly, attract customers.

Getting employees to work together as simply and effectively as possible is a goal of just about every business, and these new social tools seem to be a step in the right direction. There's always room for improvement, though, and I expect all of the tools will continue to develop.

Michael J. Miller's Forward Thinking Blog: forwardthinking.pcmag.com
Michael J. Miller is chief information officer at Ziff Brothers Investments, a private investment firm. From 1991 to 2005, Miller was editor-in-chief of PC Magazine, responsible for the editorial direction, quality and presentation of the world's largest computer publication.
Until late 2006, Miller was the Chief Content Officer for Ziff Davis Media, responsible for overseeing the editorial positions of Ziff Davis's magazines, websites, and events. As Editorial Director for Ziff Davis Publishing since 1997, Miller took an active role in...
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